# Thailand Navigates Competitive Pressure Amid US Trade Agreements - Link: https://www.thailand-business-news.com/investment/234740-thailand-navigates-competitive-pressure-amid-us-trade-agreements - Published: 2025-07-21T10:34:00+07:00 - Author: Nguyen Trang Thailand faces mounting competition in attracting foreign direct investment (FDI) following new trade agreements between the United States and Southeast Asian counterparts Vietnam and Indonesia. These deals offer zero-tariff access to American exports— positioning both nations as more attractive investment destinations and prompting Thailand to accelerate its own trade diplomacy efforts. ### Indonesia’s Economic Leverage Indonesia’s trade pact includes a 19% import tariff on its exports to the US, while American goods enter duty-free. In return, Indonesia pledged to purchase $15 billion in energy products, $4.5 billion in agricultural goods, and 50 Boeing aircraft. Its $17.9 billion trade surplus with the US last year underscores the country’s strategic economic clout as a G20 member and the region’s largest consumer market. ADVERTISEMENT ### Vietnam’s Growing Trade Influence Vietnam’s agreement with the US reinforces its strength as a manufacturing base, with over 30% of exports directed toward the US market—significantly ahead of Thailand’s 18%. With a similar zero-tariff arrangement, Vietnam continues to attract global investors seeking efficient supply chains and tariff-free export routes. ### Thailand’s Negotiation Strategy Thailand initiated formal trade discussions with the US Trade Representative on July 16, proposing zero tariffs on 10,000 product categories and launching a ฿200 billion soft loan program to support affected industries. Relief measures are also under development to cushion sectors facing 20%–36% tariff exposure. Thailand maintains a $45 billion trade surplus with the US, giving it room to negotiate, but also placing it under scrutiny. ### Related**Posts** ### 󠀁[Thailand Approves Four New EEC Zones to Attract Advanced Industry Investment](https://www.thailand-business-news.com/investment/337030-thailand-approves-four-new-eec-zones-to-attract-advanced-industry-investment)󠁿 ### 󠀁[What sector-specific licenses are required for foreign investors in Indonesia?](https://www.thailand-business-news.com/asean/334904-what-sector-specific-licenses-are-required-for-foreign-investors-in-indonesia)󠁿 ### 󠀁[What Would an ASEAN-Canada Free Trade Agreement Mean for Foreign Investors?](https://www.thailand-business-news.com/asean/331504-what-would-an-asean-canada-free-trade-agreement-mean-for-foreign-investors)󠁿 ### 󠀁[Thailand’s Floods Expose Severe Vulnerabilities in Its Automotive Supply Chain](https://www.thailand-business-news.com/business/332669-floods-in-thailand-highlight-the-vulnerability-of-the-countrys-automotive-supply-chain)󠁿 ### Industry Stakeholders Urge Strategic Caution Thanakorn Kasetsuwan, President of the Thai National Shippers’ Council, supports tariff reductions under favorable rules-of-origin conditions. Meanwhile, Nava Chantanasurakon, Vice Chairman of the Federation of Thai Industries, warns against full liberalization— particularly for capital-intensive sectors such as chemicals—while advocating selective tariff cuts for pharmaceuticals and other strategic goods. ### Risk Zones and Economic Pressures Bank of Thailand Governor Sethaput Suthiwartnarueput highlights three key vulnerabilities: exporters heavily reliant on US markets, domestic oversupply risks from displaced foreign goods, and SME-centric industries like electronics, furniture, and textiles. He underscores the importance of coordinated policy adjustments to maintain economic balance. ### Long-Term Investment Outlook According to Amonthep Chawla, Head of Research at CIMB Thai Bank, Thailand should aim for a competitive tariff range of 25%–30% to maintain investor interest without destabilizing sensitive sectors. He emphasizes Thailand’s enduring appeal in high- value industries such as advanced electronics, medical devices, electric vehicles, processed food, and service innovation. While Thailand’s liberalization efforts may progress more cautiously than its regional peers, its ability to sustain FDI will depend on clearly defined strengths and adaptable policy frameworks that respond to a changing global trade environment.